Wachovia Corp., the North Carolina-based company that's the biggest bank in Philadelphia and other East Coast markets, "made a habit of helping move money for Mexican drug smugglers," writes Bloomberg's Michael Smith here. http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aXf9c5B9KWfA
"Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers... Wachovia admitted it didn't do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007. That's the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history -- a sum equal to one-third of Mexico's current gross domestic product...
"Behind the [drug-war] carnage in Mexico is an industry that supplies hundreds of tons of cocaine, heroin, marijuana and methamphetamines to Americans... Narcotics cost the U.S. economy $215 billion a year -- enough to cover health care for 30.9 million Americans -- in overburdened courts, prisons and hospitals and lost productivity...
"'It's the banks laundering money for the cartels that finances the tragedy,' says Martin Woods, director of Wachovia's anti-money-laundering unit in London from 2006 to 2009. Woods says he quit the bank in disgust after executives ignored his documentation that drug dealers were funneling money through Wachovia's branch network. 'If you don't see the correlation between the money laundering by banks and the 22,000 people killed in Mexico, you're missing the point.'"
While "Wachovia is just one of the U.S. and European banks that have been used for drug money laundering... no bank has been more closely connected with Mexican money laundering than Wachovia... In the three years leading up to Wachovia's agreement with the Justice Department, grand juries served the bank with 6,700 subpoenas requesting information. The bank didn't react quickly enough to the prosecutors' requests and failed to hire enough investigators, the U.S. Treasury Department said in March.
"After a 22-month investigation, the Justice Department on March 12 charged Wachovia with violating the Bank Secrecy Act by failing to run an effective anti-money-laundering program. Five days later, Wells Fargo promised in a Miami federal courtroom to revamp its detection systems. Wachovia's new owner paid $160 million in fines and penalties, less than 2 percent of its $12.3 billion profit in 2009. If Wells Fargo keeps its pledge, the U.S. government will, according to the agreement, drop all charges against the bank in March 2011.
"Wells Fargo regrets that some of Wachovia's former anti- money-laundering efforts fell short, spokeswoman Mary Eshet says. Wells Fargo has invested $42 million in the past three years to improve its anti-money-laundering program and has been working with regulators, she says... The bank declined to answer specific questions, including how much it made" from handling drug money.